Shares of IndusInd Bank gained 1.7% during the session. The stock is among the top gainers in Nifty Bank index.
- The advance comes after Jefferies reiterated ‘buy’ on the stock and raised target from Rs 1,250 to Rs 1,330; an implied upside of 21.89%.
- Jefferies said signs of improvement in retail deposit franchise and ALM (Asset & Liability Management) were visible from the annual report for FY2021-22 and added that it would track progress amid rising rates and growth recovery.
- Jefferies said the bank carried enough buffer even as NPAs fell. Jefferies observed that the lender’s initiatives on rural banking, liability could result in turnaround in RoA and retained it as one of the top picks in its coverage universe. Jefferies upgraded earnings by nearly 2% and estimated a turnaround in earnings over FY22-24 with better growth, lower credit costs and expected RoA to improve to 1.7%, RoE to rise to 15%
- However, the brokerage flagged the dependence on wholesale funding as a key risk despite the improvement in deposit franchise. While gross NPA ratio fell to 2.3% in FY22 compared to 2.7% in FY21, NPAs like infra and personal loans rose.
- Of the 49 analysts tracking the company, 44 maintain ‘buy’, four suggest ‘hold’ and one recommends ‘sell’. The return potential of the stock is 11.2%.
Source: Jefferies Report
